Wednesday, 15 February 2017

It's UK jobs report day once again. This month's labour market data release from the Office for National Statistics (ONS) mostly covers the three months to December (i.e. Q4) 2016

The UK labour market stabilized in the final quarter with little overall activity on the jobs front combined with slightly
weaker growth in productivity and pay.

The total number of people in
work increased by 37,000 to 31.837 million (yet another record employment rate of 74.6%). But there was no increase in the number of employees - the smallish rise in employment consists of more self-employed people (up 13,000), more unpaid family workers (up 4,000) and more people on government supported schemes (up 21,000). The level of job vacancies meanwhile was broadly flat (at around 750,000) while the unemployment rate held steady at 4.8%.

The ONS commentary suggests the labour market is now edging toward full capacity. But if by this they mean the market is now quite tight this still isn't showing up in the pay figures. Growth in output per hour worked (aka labour productivity) dipped to 0.3%, down from 0.4% in the third
quarter, and together with stable unemployment this led to a slight fall in the
rate of growth of average weekly earnings to 2.6%. With consumer price inflation
picking-up, UK workers are thus beginning to face another bout of downward pressure
on real pay, which may depress overall economic growth in the course of 2017.

However, there is little sign that the labour market
is yet being affected by an exodus of EU born workers following the EU
referendum result. Given seasonal factors the number of EU born people working
in the UK was more or less flat at around 2.3 million in the second half of last year, and in the final quarter of 2016 was 188,000 higher than in the corresponding quarter of 2015. While this may
suggest the UK is no longer the draw it once was for EU migrants, Brexit has
yet to trigger a big EU labour exit.’